In recent years, India has continuously expanded its renewable energy capacity to enhance energy security and provide more stable power supply for manufacturing, semiconductors, AI, and data centers. However, in the energy storage sector, India still heavily relies on China’s supply chain, posing practical constraints on its goal of self-sufficiency.
Mandatory energy storage accompaniment for new projects
Last week, India's Central Electricity Authority released a draft regulation requiring all new government-owned wind and solar power projects commissioned after July next year to be equipped with battery energy storage systems to release green electricity when needed.
This arrangement aims to address the fluctuation in wind and solar power output. Industry experts note that solar and wind energy are significantly affected by weather, seasons, and time of day, and their generation peaks often do not align with electricity demand peaks, making energy storage a critical component for enhancing power supply stability.
Domestic production capacity is less than 1%
According to Wood Mackenzie, India’s battery demand pipeline is approximately 260 GWh based on demand projected from competitive tenders in 2026, but domestic battery manufacturing capacity currently accounts for less than 1%.
The institution stated that nearly 80% of the batteries used for renewable energy storage in India come from China, with the remaining approximately 20% coming from other Asian regions such as South Korea and Taiwan.
- Domestic battery manufacturing in India accounts for less than 1% of demand pipeline.
- Nearly 80% of renewable energy storage batteries come from China.
- The remaining approximately 20% comes from regions such as South Korea and Taiwan.
Coal-fired power remains the main source of electricity.
Although India has seen rapid growth in renewable energy capacity over the past decade, with solar and wind now accounting for more than 40% of total installed power capacity—approaching that of coal power—the power generation mix has not yet undergone a corresponding transition.
For the fiscal year ending March 2026, nearly 70% of India’s electricity generation still came from coal, while solar and wind combined accounted for just over 15%. This also highlights that increased installed capacity does not necessarily equate to a proportional increase in reliable power supply.
Moody's analysts say that energy storage can not only shift excess green electricity to peak demand periods but also help stabilize revenue from renewable energy projects and reduce losses caused by curtailment.
Supply chain security and manufacturing goals are intertwined.
The report states that India seeks to expand domestic manufacturing while also requiring stable and sufficient electricity to accommodate the shift of Apple’s supply chain and to promote the growth of local chip, AI, and data center companies.
S&P Global Energy researchers say China controls over 80% of global manufacturing capacity across multiple critical segments of the battery supply chain, exposing India to risks such as price volatility, trade restrictions, and excessive technological concentration.
However, market institutions also believe that if the project progresses smoothly and key mineral and recycling policies are properly implemented, India’s domestic cell production capacity could still increase in the future. Wood Mackenzie estimates that it may still take more than a decade for India to develop a relatively complete local battery manufacturing capability.